History shows that production cuts are more common in the government sector than among private firms. With the PSUs freezing/cutting their vaccine facilities, roughly half of the governments budget on universal immunisation programme (UIP) is now spent on procurement from the private sector against 25% some five years ago.
Commerce minister Anand Sharma has expressed concerns that a potential takeover of say, a Bharat Biotech or a Serum India by a multinational could affect production levels of essential immunisation. But such a threat,
however real it would be, has more to do with the governments own vaccine institutes being in a dire need of revival.
With three PSU vaccine firms supplying the bulk of the vaccines required for the countrys basic immunisation programme shut for over two years, the government has had to buy essential vaccines from the private sector at higher prices. Industry experts said the cost of procuring basic vaccines like DPT (diphtheria, pertussis, tetanus), childhood TB (BCG) and OPV (oral polio vaccine) from private companies accounted for around 50% of the R1,045 crore spent by government in 2012-13 for UIP.
The current policy is not conducive for the development of a public sector vaccine industry. From 23 PSU vaccine R&D institutes in the pre-liberalisation era, we have now come down to six. While the private sector has boomed in the period, the demand-supply gap has widened, leading to a substantial portion of basic vaccines also being imported by the government, Y Madhavi, principal scientist at National Institute of Science, Technology and Development Studies, said.
Recently, India faced an acute shortage of yellow fever vaccine creating a black market price of R20,000 for each dose of this vaccine, as opposed to the government price of R400. The government had to import huge quantities from multinational companies like Sanofi Pasteur to meet domestic demand. The shortage occurred due to the two-year closure of the public sector Central Research Institute (CRI) at Kasauli, which was the only company producing the yellow fever vaccine required for travel to 44 countries in Africa and South America.
Similarly, for measles immunisation, the government depends solely on vaccines from Serum India since the two PSUs Indian Immunologicals Ltd and Human Biologicals Institute no longer have sufficient output, according to Central Bureau of Health Intelligence. The majority of OPV vaccines are also bought from private players for the governments immunisation programmes.
In January 2008, three PSUs (CRI, Pasteur Institute of India, Coonoor, and BCG Vaccine Lab, Chennai) were shut down, citing non-compliance with the World Health Organisations good manufacturing practices (GMP). They were reopened in February 2010. However, overall vaccine production by these units have dwindled since then.
Moreover, new (improved) vaccines for typhoid, influenza type B, anti-rabies, hepatitis B, meningitis, etc are all made and sold in India. As many as 19 companies manufacture vaccines in India and there are MNCs like GSK, Merck and Pfizer who sell vaccines in the country but not produce them locally. The Indian manufacturers also earn revenue from exports to UN agencies and charitable organisations like the Bill & Melinda Gates Foundation and the Global Alliance for Vaccine and Immunisation.
Of course, there is a campaign for including some of these newer vaccines in the UIP but except the hepatitis B vaccine, none has been included yet.
According to a McKinsey report, the Indian vaccine market is currently $250 million, with the private sector accounting for a two-third share. McKinsey expects the vaccine market to grow to $1.7 billion by 2020. Another estimate puts the domestic vaccine market at $350 million, with half of it belonging to UIP.
The PSUs decline has not led to a decline in the number of vaccines produced in India in fact, 23 vaccines are now manufactured in the country as against 12 a decade ago.
CRI and Pasteur Institute together supplied over 90% of the DPT vaccine doses and over 80% of the tetanus toxoid (TT) vaccine used for government immunisation programme in 2006-07. However, in 2012-13, the two institutes together produced only 36% of DPT vaccines and 23% of the TT vaccines.
In the same period, the price of DPT vaccine more than doubled from Rs 12 (2006-07) to Rs 28 (2012-13) per vial of 10 doses. Similarly, the price of TT vaccine increased from Rs 6 to Rs 15.
Experts said that in 2006-07, BCG Lab supplied the countrys entire stock of BCG vaccine 894 doses. However, the 502 lakh doses of BCG vaccine procured by government in 2013 was entirely from the private sector.
Private companies including Punes Serum Institute of India and Chennais Green Signal Bio-Pharma are the two other manufacturers of BCG vaccine. Since 2008, the price of BCG vaccine has also gone up from Rs 13 to Rs 30 per vial of 10 doses.
Private players contend that prices went up not because of the shortage of vaccines, but due to demand for higher levels of quality compliance and the need to incorporate vaccine vial monitor. Moreover, they said that lack of co-ordination between demand forecasting and procurement of the governments vaccine policy leads to shortages.